This story is provided and presented by our sponsor Navy Federal Credit Union, a U.S. credit union headquartered in Vienna, VA, serving the U.S. Armed Forces and their families, chartered and regulated under the authority of the National Credit Union Administration.
For more information, visit navyfederal.org.
In basic training, you were issued equipment to help you perform tasks and complete the mission. A credit card is no different – think of it as essential gear to help you in your financial journey. It’s not only a great tool to help you build credit history, but it also rewards you for everyday purchases and paves the way for a solid financial foundation.
Build Credit
The primary benefit of a credit card is building credit history. Many service members are without credit history at a young age, which can hurt them in the future when signing a lease or starting a cell phone contract. This may not seem like a big deal during the first few years of service, but will quickly become a hassle when trying to purchase a home or car. This is because financial institutions use your credit score and history to determine a variety of decisions, like whether to grant you a loan. Your credit score even determines the annual percentage rate (APR), or interest accrued on your card. Also, if you leave the military, some civilian employers will use the score to gauge your financial responsibility.
It’s never too early to develop good credit. Start now and establish quality standing with your financial institution to make things easier when it comes time to apply for a loan. Your relationship with your lender is key. The industry can be wary of lending money to those with no credit history. When used responsibly, a credit card helps establish a history of making payments on time, thus showing your financial institution you can be trusted to make larger premiums on higher ticket items.
Transfer the discipline you gained in your military career to your financial life, and you’ll go far. By making payments on time and using your card responsibly, you’ll reap the rewards that a credit card can bring. Personal accountability and consistency goes a long way, much like in your military service.
Find a Card That’s Right for You
With several appealing credit card offers in the market today, it’s difficult to know which one is right for you. Don’t let the amount of information online overwhelm and defer you from making the smart choice.
Before choosing your card, consider how you spend your money. Traveling overseas with the military? Pick a card with travel rewards and no foreign transaction fees. Or, if you enjoy exploring the different cuisines those countries have to offer, a restaurant rewards program is a great option, like Navy Federal’s GO REWARDS® card that offers three times the points when dining out.
Financial institutions have upgraded not only the way you earn rewards, but how they’re redeemed. Many have their own private shopping program with perks and discounts for cardholders. For example, a travel rewards program may give you a price cut when redeeming points for airfare, hotels, cruises and car rentals.
Treat the Card Carefully
Your first credit card will be your most important. Why? Credit scores are partially based on the length of credit history. Therefore, it’s advantageous to keep your oldest card in your wallet. That’s where the loyalty and discipline you’ve learned in the military comes into play.
When you decide to apply for your first credit card, go with a financial institution you trust. Set up auto-pay to avoid late payment fees. Read the terms and conditions carefully and know what fees are associated with the card. Avoid common fees by watching for annual fees, foreign transaction fees and balance transfer fees. Most importantly, be aware of your interest rate. This is crucial if you think you may carry a balance from time to time.
There are similarities between getting your first credit card and entering the service. You may have trouble adjusting at first, but before long, the routines and disciplines become second nature. Use the same self-control and discipline with your credit card that you learned at basic training, and you’ll be on your way to a lifetime of financial success.
You May Also Like:
– How-To Navigate the Credit Card Application Process For The First Time
– Credit 101: Potential Credit Card Fees
– VIDEO: Let’s Talk Credit Cards and Chip Technology
©2015 Navy Federal Credit Union. All Images used for representational purposes only; does not imply government endorsement.